Strategic HR Management and Planning

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 Chapter Objectives
After you have read this chapter, you should be able to:
• Summarize the strategic planning process and how it drives the organizational
activities.
• Outline how strategic HR management is linked to the organizational
strategies.
• Discuss how internal and external environmental factors affect HR strategies.
• List HR strategic challenges faced by modern organizations.
• Explain how technology is affecting HR management practices and employees.
• Identify how organizations can measure and assess the effectiveness of HR
management practices.

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 Strategy and Strategic Planning
Strategy Strategic Planning

The proposition an The process of defining

organization follows for how organizational strategy and
to compete successfully and allocating resources toward
thereby survive and grow. its achievement.

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Strategic Planning Process
Organizational Mission

SWOT Analysis

Establish Goals and

Objectives

Formulate
Organizational Strategy

Formulating
Supporting functional
Strategies

Implement

Evaluate and Reassess

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 Strategic Human Resource Management
• Strategic HR management refers to the use of Human Resource Management
( HRM) practices to gain or keep competitive advantage.
• Talent Acquisition, Talent Deployment, Talent Development and rewarding
talent are all strategic HRM approaches.

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Traditional HR versus Strategic HR

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Operationalizing HR Management Strategies

Thinking
Strategically

Understand Focus on key Know what Prepare for

the business business goals to measure the future

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Strategic Human Resource Management

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High-Performance Work Practices
Incentive Compensation

Training and Development

High
Employee participation Performance
Organization

Selectivity in Hiring

Flexible Work Arrangements

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 Environmental
Analysis

Internal External
Environmental Environmental
Analysis Analysis

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 HR Factors in the SWOT Analysis
STRENGHTS WEAKNESSES
Intellectual Capital Lack of skilled employees
Loyal, Committed employees Lack of leadership pipeline
Innovative, adaptive employees Outdated Talent Management
High- Performance Practices Practice

OPPORTUNITIES THREATS
Market Position Legal mandates and restrictions
Unexplored Markets Competitor Power
Global Expansion Economic Uncertainty
Technology Advances Talent Shortage

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 Environmental Analysis
• Environmental Scanning
• The assessment of internal and external environmental conditions that
affect the organization

Legislative/Political Economic
Influences Conditions

HR
Planning

Demographic Geographic and

Changes Competitive Concerns

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Global Competitiveness and Strategic HR

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 Global Competitiveness and HR
• The globalization of business means organizations now operate across borders.
• An MNC, sometimes called “transnational corporation”, is a corporation that
has facilities and other assets in at least one country other than its home
country.

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 Global Framework
• Having a global HR mind-set means looking at HR issues from an international
perspective, using ideas and resources throughout the world.

• For example, the organization may decide to standardise talent development

and succession planning but permit local managers to establish compensation
and labor relations policies.

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Global Competitiveness and Strategic HR

Global Framework

Global Legal
Offshoring Global
and Regulatory
Operations Staffing
Factors

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 Global legal and Regulatory Factors
• Senior executives and HR professionals must review each country’s legal and
regulatory factors both before and during ongoing operations.

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 Offshoring
• Offshoring is the relocation by a company of a business process or operation
from one country to another.

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 Global Staffing
• There are 4 strategic approaches to International staffing. Each organization
will use a staffing model that best fits its culture and strategic goals.
1. Ethnocentric Policy
2. Polycentric Policy
3. Geocentric Policy
4. Regiocentric Policy

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 HR Planning in Mergers and Acquisitions
• Cultural Compatibility
• The extent to which such factors as decision-making styles, levels of
teamwork, information-sharing philosophies, and the formality of the two
organizations are similar.

• HR’s Role in Mergers and Acquisitions

• Communicating decisions
• Revising the organization structure
• Merging HR activities

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HR Activities during Mergers and Acquisitions

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Changing the Organizational Culture
Define the desired Deploy role
behaviors models

Culture

Provide meaningful Provide clear and

incentives consistent messages

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 Managing a Talent Surplus
Reduction in Work Hours
or Compensation

Attrition and Hiring

Freezes
Workforce
Reductions
Voluntary Separation
Programs

Workforce Downsizing

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 Managing a Talent Shortage

Use
overtime

Implement
Outsource
alternative work
work Tactics to arrangements
Reduce
a Talent
Shortage
Bring back Use contingent
recent retirees workers

Reduce
turnover

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Managing Talent Supply Imbalances

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 Technology Challenges
Effects on Work and Effects on Work
Organizations Processes

Technology

Effects on Effects on
Communication HR Activities

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Measuring Effectiveness of HR

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• HR Metrics

• Specific measures tied to HR performance indicators.

• Development and use of metrics that can better demonstrate HR’s
value and track its performance.

• Characteristics of good HR metrics:

• Are accurate.
• Are linked to strategic and operational objectives.
• Have clearly understood calculations.
• Meet information needs.
• Can be compared internally and internally.
• Can be used to drive HR management efforts.

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Key HR Metrics

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 HR and Benchmarking
• Benchmarking
• Comparing specific measures of performance to an industry standard or
best practices in other “best-in-class” organizations.

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 HR and the Balanced Scorecard
• The Balanced Scorecard
• Uses a diverse set of performance measures to align performance efforts with
organizational strategy.
• Avoids a limited focus on financial measures by focusing on long-term drivers of
performance and organizational sustainability.
• Requires spending considerable time and effort to identify the appropriate HR
measures and how they tie to strategic organizational success.
• Address three elements—accountability, validity, and actionable results.

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Balanced Scorecard Framework

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Human Capital Effectiveness Measures
• Return on Investment (ROI)
• Shows the value of investments in HR activities.

C
ROI 
A B
A = Operating costs for a new or enhance system for the time period
B = One-time cost of acquisition and implementation
C = Value of gains from productivity improvements for the time period

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 Other Effectiveness Measures
Human capital value
added (HCVA)

Human capital return on

investment (HCROI)

Human economic value

added (HEVA)

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 Assessing HR Effectiveness
• HR Audit
• A formal research effort that evaluates the current state of HR management
in an organization
• Audit areas:
• Staffing
• Compensation
• Health and safety
• Legal compliance
• Administrative processes and recordkeeping
• Employee retention
• Benefits

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Thank You

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